The yen rose about 0.1% to 142.24 per dollar in early Asian trading, although trading was thin as Japan has a national holiday.
The yen rose more than 1%, reaching a low of 140.31 on Thursday on news that Japan had bought yen to defend its battered currency.
The move, which occurred in the late Asian hours, came after the Bank of Japan held onto its ultra-low interest rates, pushing the yen to a new 24-year low, sliding past $145 a dollar in the aftermath.
“Given that (the BOJ) … is going against the tide of rising interest rates, they will have to spend a long time on this to have any chance of success,” said Ray Attrill, head of FX strategy at National Australia. Bank.
“My gut feeling is that the law of diminishing returns will apply as far as intervention is concerned.”
Meanwhile, the British pound rose 0.05% to $1.12645, but was not far from the new 37-year low of $1.1213 reached in the previous session, helped little by a 50 basis point rate hike by the U.S. Bank of England tonight.
The euro, Aussie and kiwi also stayed clear of new lows on Friday as a rising greenback, boosted by a very hawkish Federal Reserve and rising Treasury yields that kept the dollar in demand.
The benchmark yield on 10-year Treasuries hit an 11-year high last night at 3.718%, while the two-year yield remained well above 4%, most recently standing at 4.1223%.
“Ironically, I think the rise in U.S. Treasuries rates tonight, especially the 10-year ones, is a direct result of the view that the Bank of Japan Treasuries will have to sell Treasuries, to provide the dollars for an intervention… outside the dollar/yen, this will make the dollar even more attractive against other currencies,” Attrill said.
The US dollar index rose to 111.27, near a two-decade high of 111.81 in the previous session, and is on track for weekly gains of 1.5%.
The euro rose marginally 0.02% to $0.9836 after falling to a new 20-year low of $0.9807 overnight last night.
Flash September purchasing managers’ indices for the euro-zone, the UK and the United States are expected later on Friday and should better reflect the bleak global outlook.
The Aussie was up 0.11% to $0.6649, while the kiwi was 0.05% higher at $0.5849, and both losses are sustainable after falling to their lowest level since 2020 in the previous session.